LEGAL HOTLINE ARCHIVE
Bonus

Q. What is the appropriate method for handling a "bonus" from a Seller to the Buyer's broker? To whom do you disclose the fact of the bonus? If disclosure was not made, is there vulnerability? May the Buyer make use of the "bonus" to his advantage?

A. Under Louisiana law, a bonus paid by a seller to a buyer's broker must be disclosed in writing to all persons who are parties to the real estate transaction. R.S. 37:1456(22) provides that a licensee may be censured or have his or her license suspended or revoked for:

Failure to advise all parties to a real estate transaction in writing of compensation being received from any source in connection with the real estate transaction.

Similarly, Section 3301 of the Rules and Regulations of the Louisiana Real Estate Commission provide that:

A licensee shall not accept compensation from more than one party without the written acknowledgement of all parties to the transaction.

The Code of Ethics of the National Association of Realtors® also contains a similar rule. Specifically, Article 7 of the Code of Ethics provides that:

In a transaction, Realtors® shall not accept compensation from more than one party, even if permitted by law, without disclosure to all parties and the informed consent of the Realtor's client or clients.

We know of no law or rulings which restrict the use of a bonus received by a Buyer. However, as noted above if payment of the bonus is not properly disclosed in writing to all parties to the real estate transaction, the Buyer could have his license suspended or revoked, or be fined (up to $5,000) and/or ordered to undergo continuing education.

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All responses featured in the Hotline Archive are time sensitive. They reflect the law, regulations and ethical considerations in effect at the time of the response. Responses to the legal questions should not be construed as specific legal advice, nor are they designed to cover every aspect of a legal situation.

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